One of Facebook’s official arbiters in the battle against ‘fake news’ is on the brink of financial collapse.

The site, which long-served as the internet’s best source for debunking myth and urban legend started an online fundraising campaign with GoFundMe earlier this week, with the hope of raising $500,000.

Founder David Mikkelson explained on the GoFundMe page, that their recent financial hardship is due to contract dispute with one of the site’s vendors. Mikkelson claims the vendor is holding site resources hostage:

We had previously contracted with an outside vendor to provide certain services for That contractual relationship ended earlier this year, but the vendor will not acknowledge the change in contractual status and continues to essentially hold the web site hostage. Although we maintain editorial control (for now), the vendor will not relinquish the site’s hosting to our control, so we cannot modify the site, develop it, or — most crucially — place advertising on it. The vendor continues to insert their own ads and has been withholding the advertising revenue from us.

Our legal team is fighting hard for us, but, having been cut off from all revenue, we are facing the prospect of having no financial means to continue operating the site and paying our staff (not to mention covering our legal fees) in the meanwhile.

The vendor, San Diego-based Proper Media tells a different story.

From The Daily Mail:

But Proper Media insists that Mikkelson’s personal spending and mismanagement is to blame for Snopes’s money woes.

In legal papers filed in San Diego Superior Court, they say: ‘But while Snopes is built entirely around the concepts of transparency and truth, its founder, Defendant David Mikkelson (‘Mikkelson’) has engaged in a lengthy scheme of concealment and subterfuge to gain control of the company and to drain its profits.’

The company says Mikkelson unilaterally broke the advertising contract earlier this year and has bristled at shareholder efforts to rein in his spending.

They note that even as Mikkelson claimed to be under financial duress in court filings in June, he signed the documents while on a trip to Orleans, France.

‘If Mikkelson is permitted to continue unabated as a director of Bardav, he will irreversibly drain the company of important financial resources through personal and unnecessary expenditures,’ said Proper Media in the lawsuit.

The company also claims Mikkelson carried out ‘pervasive fraud’ at Snopes and used the accounts to pay for lavish trips and personal items while refusing requests from shareholders to examine his expenditures.

According to the lawsuit, Mikkelson spent ‘tens of thousands of dollars’ from the company on legal fees for his acrimonious divorce from Barbara last year, a drawn-out battle that included disputes over Mikkelson’s salary and alleged spending on prostitutes.

Court documents from their divorce and its aftermath revealed that he wanted to be paid $720,000 a year.

He is also accused of spending ‘tens of thousands of dollars’ on personal trips, including a honeymoon with his new wife to Tokyo Disneyland.

In December, Mikkelson “was accused of embezzling nearly $100,000 in company funds to spend on personal expenses and prostitutes” when Mikkelson and his now ex-wife were going through a nasty divorce. His ex-wife Barabara reportedly requested Mikkelson’s suspension from company bank accounts, fearing he’d bleed them dry.

After his divorce, Mikkelson married escort, Elyssa Young.

According to The San Diego Reader, Mikkelson carefully denies embezzlement claims, saying he did not use company funds improperly before he married his new wife/escort:

“I did not ’embezzle’ or use any company funds to pay [Young] before we were married and before she was officially hired at,” Mikkelson says in an interview. “[She] has long worked on behalf of, first as an unpaid volunteer and then as a full-time employee, and it’s only within the last year that she started to receive an actual salary.”

Mikkelson claims his request for a raise was a “package deal” with only a portion of it being salary, and that the parties filing suit are attempting to “obfuscate matters and stir up outrage by confusing salary with compensation.

“Using the number of articles published by the site per day is a ridiculous metric for measuring success. It only goes to show how much Schoentrup and Richmond are disconnected from the actual operations of this company. I successfully managed every aspect of this web site on my own for 21 years before Proper Media came along, and now that we’ve grown to a staff of 16 people, we’re more than capable of getting along without them.”

And about that 355 percent raise, Mikkelson says that the payment was a package deal. Only a small portion of the $1.118 million was for his salary.

“The claim is a deliberate attempt to obfuscate matters and stir up outrage by confusing salary with compensation. The overall amount I received last year included my salary for running the company, money the company earned before they bought into it, as well as profit distributions to shareholders. And this amount was not some number that I pulled out of the air, but was in fact based on an analysis performed by a leading compensation expert.”

Snopes once served as the Internet’s go-to spot for facts, remaining almost completely unbiased. But in recent years, Snopes ventured into fact-checking and has managed to discredit itself among right-leaning news consumers as just another purveyor of political bias, barely distinguishable from Politifact.

It appears Snopes’ fall from grace is still far from over.

Follow Kemberlee on Twitter @kemberleekaye


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